Understanding Estate Tax in Maryland
An estate tax is a tax imposed on the assets passed from the decedent to his/her beneficiaries after death. While the federal government has its own estate tax, several states also impose an estate tax, including Maryland. However, this tax is only levied when your estate reaches a certain value. Contacting an attorney will help you better understand your rights and responsibilities with respect to Maryland’s complex estate tax laws.
Gross Estate for Tax Purposes
Your estate will be taxed on the gross amount and value of the estate, and will be composed of the following:
- Bank accounts
- Certificates of Deposit
- Investments (such as stocks, bonds, and/or brokerage accounts)
- Real estate
- Life Insurance policy proceeds
- Retirement plan account funds
- Business interests (corporation, limited liability company, or sole proprietorship)
- Personal belongings
Whether or not these assets go through probate, they are all considered gross assets for calculating estate tax in Maryland.
Maryland Estate Tax Rates
An accounting of your estate will be done at your death, also why it is known as a “death tax”. In 2019, the threshold for federal estate tax is $11.4 million. However, the estate tax threshold for Maryland is now $5 million. If your estate is worth less than this amount in total when you die, then no taxes will be taken from the state of Maryland on your estate.
The Maryland estate tax is collected by the state of Maryland and is due within nine months after the decedent’s date of death. Additionally, the MET-1 Estate Tax Return is required to be filed, and can be quite complex to understand and complete properly. The experienced estate attorneys at Meng Law can assist you if your loved one has passed away and is required by law to complete these forms.
Estate Tax Laws
There are several estate tax laws specific to Maryland that are significant to know and understand as you plan for the distribution of your estate after your death.
- Starting in 2019, if both spouses have passed away, a married couple can protect up to double the exemption rates.
- Social Security is not taxed, but other retirement income may be taxed.
- The estate tax deduction allows you to prevent double taxation against any income tax the estate may receive after the decedent’s death.
These are just a few of the complex estate tax laws that exist in Maryland that you must adhere to as you are either estate planning, or preparing estate tax returns.
Let Us Help You Today
An experienced attorney can help you determine the best way to plan for the distribution of your estate after your death. Your estate is unique and you deserve the right to legally protect as much of your estate as possible from taxation. Estate planning errors are common, and knowing your entire estate asset picture, along with your retirement income, and social security income can be challenging to compute without legal guidance.
Estate planning is a complex process, and that is true even for someone who does not reach the Maryland estate tax threshold amounts. Estate planning, and preparing estate state and federal tax returns after the death of a loved one, are both challenging endeavors in the ever-changing estate and tax law landscape. Contact the skilled Prince Frederick estate & trust litigation attorneys serving southern Maryland at Meng Law at 786-776-0130 or online today for a free consultation.